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An appraisal is an evaluation allowing the appraiser to come to an opinion of value.
There are three "common approaches to value" which helps the appraiser arrive at this opinion or estimate.
One of them is the Cost Approach - which is how much it would cost to replace the improvements, less physical deterioration and other factors, plus the land value.
Another of the processes is the Sales Comparison Approach - which concerns making a comparison to other similar properties within a close proximity which have recently sold.
The Sales Comparison Approach is normally the most definitive and clearest indicator of a liklely sales price for a residential property.
The third approach is the Income Approach, which is of most importance in appraising income producing properties - it deals with estimating what an investor would pay based on the capital produced by the property.

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There are a lot of reasons to get an appraisal from Murphy Appraisal Group, LLC with the most common reason being real estate and mortgage transactions.
A few other reasons for getting an appraisal include:

To obtain a loan.

If you would like to lower your property tax obligations.

To help a homeowner realize if they owe less than 80% of their home's value and remove Primary Mortgage Insurance.

To fight inflated property taxes.

If you need to settle an estate.

To provide you an edge when purchasing real estate.

To determine an honest sales price when listing your home.

To protect your rights if your property is being taken by means of eminent domain in a condemnation case.

Because an official agency such as the IRS requires it.

If you ever find yourself in a lawsuit.

If you need a more detailed explanation of the appraisal process, please click here.

Home inspectors do not provide an opinion of value and are not appraisers.
An inspection is a third-party evaluation of the livable structure and mechanical systems of a property, from the top to the bottom.
The usual property inspector's report will contain an evaluation of the integrity of the home's heating systems, central air conditioning system (temperature permitting), interior plumbing and electrical systems, the roof, attic, and visible insulation, walls, ceilings, floors, windows and doors, the foundation, basement, and visible structure.

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To be blunt, it's like comparing broadband and dial-up.
The CMA uses market trends to conduct most of their business.
An appraisal relies on comparable sales that can be verified by public record.
The appraisal report will also contain area and building costs.
All a CMA does is generate a "ball park figure."
Being a documented and carefully investigated opinion of value, appraisals are defensible and stand up in legal situations.

The credentials of the person creating the report is actually the biggest difference between a CMA and an appraisal.
Real estate agents, who may not have a complete understanding of valuation methods or the entire market, write CMA's.
A certified, Texas licensed professional who has formed a career on valuing properties in and around Harris County creates the appraisal.
Further, the appraiser is an independent party, with no conditional interest in the property's value, unlike the agent, whose income is tied to the price of the home.

Each appraisal must reflect a credible estimate of value and should clearly state the following:

The client and whose purposes the appraisal is to serve.

How the appraisal is supposed to be used.

The reason for the appraisal.

The type of value contained and a definition of the value reported.

The effective date of the appraisal.

Pertinent property characteristics, including: location, physical characteristics, legal attributes, economic factors, the property rights valued, and non-real estate items included in the valuation, such as personal property, items that are more or less permanently installed and even intangible items.

Any known easements, restrictions, encumbrances, leases, reservations, covenants, contracts, declarations, special assessments, ordinances, and the like.

Division of interest, such as fractional interest, physical segment and partial holding.

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In the documentation of an appraisal, each appraiser must make sure of the following:

That the information analysis contained in the appraisal was proper.

Whether individually or collectively, there were no major errors contained in the appraisal, nor any relevant details left out.

That appraisal services were done in a careful and cognizant fashion.

That a trustworthy, supportable appraisal report was conferred.

There are intense education and real world experience requirements that must be adhered to in order to become a licensed appraiser in Texas.
In addition, appraisers must follow a stringent industry code of ethics and observe national standards of practice for real estate appraisal. The guidelines for carrying out an appraisal and documenting its results are guaranteed by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).

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Mortgage lenders are an appraiser's most likely customer, requesting their services to ensure a home involved in a mortgage transaction is adequate collateral for a loan.
Appraisers also provide opinions in litigation cases, tax matters and investment decisions.

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One of the primary things an appraiser does is to collect data.
Data can be categorized as either Specific or General. Specific data is collected from the property itself; Location, condition, amenities, size and other specific data are documented by the appraiser during an inspection.

General data is gathered from a variety of sources.
Local Multiple Listing Services (MLS) have information on recently sold homes that might be used as comparables.
To verify actual sales prices, we research items in the assessor's office and other public documents.
Flood zone data is gathered from FEMA data outlets, such as a la mode's InterFlood product.

And most importantly, the appraiser assembles general data from his or her past experience in doing assignments for other properties in the same market.

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An appraisal is a valuable tool anytime your home's value is relevant to some financial decision.
For those selling a home, you'll want to figure out a price that gets you the most profit but also ensures you don't have to wait too long for a buyer to show up; an appraisal can help with that.
If you're buying, it makes sure you don't overpay.
For people settling an estate or divorce, an appraisal from Murphy Appraisal Group, LLC is the best documentation to ensure assets are split up properly.
Simply put, a home is often the single, largest financial asset anybody owns. Knowing its true value is essential to making the right financial decisions.

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PMI is short for for Private Mortgage Insurance.
PMI guards the lender in the event a borrower is unable to pay on the loan and the market price of the property is less than the balance of the loan.
Once you reach the point where your home's equity plus the amount you've paid is at least 20% of your loan balance, you can have your PMI dropped.

Has your home value appreciated since you first purchased? Call Murphy Appraisal Group, LLC today at (713) 468-6819 to see if you can cancel your Private Mortgage Insurance premium.

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The first step in most appraisals is the property inspection.
What this entails is the appraiser, after setting up an appointment, personally going through the home - recording the layout of the rooms, taking photos and documenting the general condition of its features.
The best thing you can do to help is make sure the appraiser has easy access to the exterior of the house (gates aren't locked, etc). Trim any bushes and move any items that would make it difficult to measure the structure. On the inside, make sure the appraiser can get to appliances like furnaces and water heaters.

You can make things go faster and improve the quality of the appraisal report by having the following things on hand:

A plot plan or survey of the house and land (if readily available).

List of personal property to be sold with the home.

Most recent real estate tax bill and or legal description of the property.

A list of any major home improvements and enhancements, the date of their installation and their cost (for example, the addition of Insulation or roof repairs) and permit confirmation (if available).

A copy of the current listing agreement and broker's data sheet and Purchase Agreement if a sale is "pending".

"The most probable price (in terms of money) which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: the buyer and seller are typically motivated; both parties are well informed or well advised, and acting in what they consider their best interests; a reasonable time is allowed for exposure in the open market; payment is made in terms of cash in United States dollars or in terms of financial arrangements comparable thereto; and the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale."

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For mortgage transactions, the lender requests the appraisal, either directly or through a third party.
While the buyer pays for the report as part of the closing costs, the lender retains the right to use the report or any information contained within. The
buyer is entitled to a copy of the report - it's usually included with all the other closing documents - but is not entitled to use the report for any other purpose without permission from the lender.

This rule doesn't apply when a home owner hires an appraiser directly.
In these scenarios, the appraiser may stipulate how the appraisal can be used; for PMI removal, or estate planning or tax challenges, for example. If not stated otherwise, the home owner can use the appraisal for any purpose.

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A home's location - what city it is in and even what part of that city - is key to this popular question.
For example,
while quality appliances are attractive, a $7000 built-in refrigerator won't pay off in a neighborhood of moderately priced homes

As a rule, the best ROI from renovating a home comes in the kitchen.
One recent study revealed that putting $20,000 into a kitchen remodel would add about $17,500 to the value of the home - or about an 88% return on investment.
Bathrooms weren't far behind, yielding 85%.
Adding bedrooms and baths can also increase the value of your home as long as your home doesn't then become an oddball for your neighborhood in terms of size.